The outlook for the retail industry deteriorated further today as JJB Sports and Game Group reported they were struggling to prop up sales, despite savage price cuts that are hurting their profit margins.

Shares in the sports fashion and video games retailers tumbled by more than 10% apiece as each reported they had been forced to increase sales promotions to combat tougher conditions on the high street.

Keith Jones, JJB Sports chief executive, pledged to make the 249-store chain "synonymous" with sales promotions as he revealed sales growth had dived this month. He said: "Since the half yearend, sales have been more volatile. We have consequently taken further steps to drive autumn and peak season sales through increased promotional activity."

Like-for-like sales growth at JJB had jumped to 18% in August on the back of promotions that boosted revenues at the expense of profitability. But growth fell to 6% in the four weeks to September 26.

JJB updated the market on recent trading after reporting a decline in first-half losses in the six months to the beginning of August, as the World Cup helped boost group sales by 10% to £184m. The group said its loss narrowed to £24.6m from £41.9m a year earlier.

Separately, Game Group disclosed that its gross margin, a measure of profitability, declined by 2.9 percentage points to 26% in its first half, as it embarked on a campaign of "high-profile one-off discount sales", according to finance director Ben White. Game announced a swing into the red – from a pre-tax profit of £14.5m to an £18.8m loss – in the six months to July 31, as sales fell by 9.6% to £624.6m.

Peter Lewis, Game Group's chairman, blamed "a very challenging marketplace and an uncertain economy" for the decline in his company's fortunes and said he remained "mindful of the prevailing tough market conditions."

Analysts pointed to the growth in the number of sales promotions as evidence that the retail market was likely to remain tough for the foreseeable future. As well as next month's government spending review, which will determine the fallout of the biggest austerity budget since the second world war, there will be a rise in VAT from 17.5% to 20% in January.

Matthew McEachran, analyst at Singer Capital Markets, said: "The JJB results for the half year were basically in line with expectations. The problem is what has happened since then. As soon as they come off promotion, they find the going very tough, but these promotions erode their profit margins.

"Promotions seem to be the common theme against an increasingly tough backdrop as retailers are finding they have to be more promotional to drive their business."

JJB ran a three-for-two promotion on all its items over the August Bank Holiday weekend and throughout September it is offering a "spend and save" promotion giving £5 off for every £30 spent.

The company would not discuss details of its forthcoming promotions, although it did concede some could be linked to the forthcoming launch of the new England soccer strip and to the half-term school holidays.

Shares in JJB tumbled by 1.60p, or 14.5%, to close at 9.40p. Game Group declined by 7.25p, or 11.0%, to close at 58.80p.